Financing Education in India

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equality in outcomes cannot be ensured, but equality in inputs, i.e., equality in opportunities,

can be ensured. Accordingly, the issues that received much attention of the educational

planners and researchers relate mostly to equality in educational opportunities -- regional,

caste and gender groups of population -- MEASURED in terms of literacy, enrollments and

number of institutions.

Even though there is relatively considerable research on efficiency CONSIDERATIONS in

education, their importance is being realised only of late when finances for education are

subject to severe squeezes. Two aspects relating to efficiency are important: efficiency of

investment made in education, and cost effectiveness. The former is measured in terms of

labour market outcomes, essentially RATES of return to education, which refer to the overall or

labour market efficiency of investment in education, while the latter, viz., cost effectiveness

refers to efficiency of investment made in educational outcomes such as number of pass-outs

of the system, survival and transition rates, etc. The labour market efficiency is also referred

to as external efficiency, and measures on cost efficiency as internal efficiency. While cost

effectiveness analysis explains how efficiently the resources are being USED to PRODUCE the

given output in the schools, rate of return analysis shows how efficient is the overall

investment in education.